The main legal point established in the judgment is that the liability of directors of a private company in liquidation under Section 179 of the Income-tax Act, 1961, is subject to the requirement for the Assessing Officer to record a finding that the tax due from the company cannot be recovered. Additionally, the outstanding tax dues of the company, which relate to a period prior to the director's appointment, cannot be recovered from the director under Section 179 (1) of the Act.

( 1 ) BOTH these writ petitions have been filed by the same petitioner challenging the proceedings and the order passed under Section 179 of the Income-tax Act, 1961, hereinafter referred to as the Act. While in writ petition No. 1502 of 2002, the petitioner has sought a writ order or direction in the nature of certiorari quashing the notice dated 26-3-2002 issued by the Tax recovery Officer, Noida, respondent No. 1, filed as Annexure No. 1 to the writ petition in respect of the alleged outstanding income tax dues against M/s. Shashank Polyplast Limited formerly Shashank Polyplast Private Limited, respondent No. 3 and other consequential reliefs, in writ petition No. 911 of 2003 the petitioner seeks a writ, order or direction in the nature of certiorari quashing the order dated 29th May, 2003 passed by the Assistant Commissioner, income Tax, Circle Noida, respondent No. 1, filed as Annexure No. 1 to the writ petition and other consequential reliefs.

( 2 ) BRIEFLY stated the facts giving rise to the present writ petitions are as follows: according to the petitioner, after doing post graduation in Commerce from Gorakhpur university he got a job on 12th February, 1979 in M/s. Prestige Engineering India Private limited at its factory at Noida. It is a sister concern of M/s. Shashank Polyplast Limited respondent No. 3. He worked there upto 31st March, 1992. Thereafter he was transferred to another sister concern of respondent No. 3, namely, M/s. Prestige H. M. Polycontainers Limited where he served till 30th June, 1997. He left the company on 30-6-1997. The Managing Director of Prestige H. M. Polycontainers Limited issued a certificate on 30th June, 1997 stating therein that there was no financial liability against the petitioner. Thereafter he started his own business at Noida. According to the petitioner, all the three companies, namely, Prestige Engineering india Private Limited, Prestige H. M. Polycontainers Limited and Shashank Polyplast Limited are being managed by one Sri P. K. Gupta, resident of A-7 Maharani Bagh, New Delhi. He has been managing Director of M/s. Prestige H. M. Polycontainers Limited. In M/s. Shashank Polyplast limited, Sri P. K. Gupta has been holding 9994 shares of Rs. 100 each out of total issued and paid up capital of 10000 shares of Rs. 100 each through his proprietorship firm Paribhas investment and Finance Company. Out of the remaining six shares of Rs. 100 each, four shares are held by Sri Shashank Gupta son of Sri P. K. Gupta, one share is held by Mrs. Gauri Shriya, daughter of Sri P. K Gupta and the remaining one share is held by Sri Brij Narain Agarwal, an employee of the company. Thus, the petitioner was not even a shareholderin M/s. Shashank polyplast Limited. The affairs of M/s. Shashank Polyplast Limited were being looked after by sri P. K. Gupta who was director and major shareholder. As an employee of M/s. Prestige H. M. Polycontainers Limited he was asked to sign some forms by Sri P. K. Gupta wherein he was made Director of M/s. Shashank Polyplast Limited w. e. f. 3rd April, 1993. However, he was a director just for the namesake and being an employee of a group company he had no option but to sign the required forms pertaining to his appointment in respondent No. 3. According to the petitioner, he was neither an employee of the said company nor had received any remuneration whatsoever from the respondent No. 3 in the capacity of a director or otherwise. It is further alleged by the petitioner that M/s. Shashank Polyplast Limited was incorporated on 20th november, 1984 as a private limited company. It became a public limited company under section 43a of the Companies Act, 1956 w. e. f. 9th February, 1992. The petitioner had resigned from the directorship of respondent No. 3 vide letter dated 20th September, 1997.

( 3 ) IT appears that there were income-tax dues of Rs. 70, 14,000 outstanding against respondent no. 3. The Tax Recovery Officer, respondent No. 1, issued a notic